Is Microsoft killing off the Zune?

Microsoft’s done a lot of talking at Mobile World Congress this week, but everyone’s starting to notice what it’s not talking about: Zune. Any mention of the media player has been conspicuously missing from the mouths of Microsoft lately, and word is the company plans to kill it off and make way for a new, rebranded product.

ZDNet directly contacted Microsoft to find out Zune’s fate. A company spokesperson responded saying, “We’re not ‘killing’ any of the Zune services/features in any way. Microsoft remains committed to providing a great music and video experience from Zune on platforms such as Xbox Live, Windows-based PCs, Zune devices and Windows Phone 7, as well as integration with Bing and MSN.”

Cause for concern originally began in the wake of the Nokia-Microsoft partnership. During the press conference announcing the companies’ collaboration, nearly every product in Windows lineup was addressed – except the Zune. Check out the press materials to the right, which clearly do not feature the media player.

Windows blogger Paul Thurrott also says insiders have confirmed the Zune death. “My sources tell me that the Zune brand is on the way out and that all Zune products and services will be moved into other businesses, including Windows Live. Zune will essentially cease to exist under this plan.”

General consensus seems to be that while the Zune name will live on, the physical devices will not. Which is a shame for a few reasons. Anti-Apple loyalists have been fiercely protective of the device, and it’s easily been one of the iPod’s best competitors. The Zune HD was the industry’s best answer to the iPod Touch, at least up until the later generation models of the Apple media player were introduced. The Zune HD2 never emerged past mere rumors, and it seems like the PMP is about to go the way of the Kin. Earlier this year, a major reshuffling left a staff void in the Zune’s department which was never filled. The device that was supposed to be the “iPod killer” never reached the full potential Microsoft had intended for it.

Microsoft also probably feels the need to choose its battles. It took on iPod with Zune and lost. Now it’s taking on the smartphone market – which is overwhelmingly dominated by the iPhone – and it’s clearly time to invest a significant amount of resources toward fueling its product in this arena. We’re sure Zune software and Marketplace will continue to live on, in the Windows Phone 7 and Xbox for example, but we wouldn’t be too shocked if the handheld PMPs stop making their way to retailer’s shelves very soon.